It’s inexcusable that Governor Pritzker didn’t provide key pension information along with the rest of his budget materials released on Wednesday. By kicking the can out seven years as Pritzker proposed, Illinois will cut its scheduled contribution to state pensions next year by over $800 million, helping Pritzker to claim a balanced budget.
But huge consequences result longer term, and Pritzker is hiding the ball. By reducing current contributions, the ultimate total cost to the state will rise by billions because of the power of compounding interest. Just how many billions? Pritzker hasn’t given us that, but the Illinois Retired Teachers Association claims the total resulting increased cost is a stunning $150 billion for present and future generations. I think that’s too high, and in any event the present value of that future cost is far lower, but we’re still talking about a huge cost Pritzker is hiding. We need all the facts too get a full answer.
Furthermore, the can kick, along with the deposit of $2 billion pension bond proceeds, will have a major impact for years to come on annual state contributions – the same contributions that are at the core of our fiscal crisis, crowding out spending on other priorities.
In other words, what does the new pension contribution ramp look like? Nobody knows. Even union-backed Ralph Martire, one of Pritzker’s transition team budget advisors, complained about that Wednesday evening in an appearance on WTTW’s Chicago Tonight.
That information is essential to evaluating the primary message Pritzker delivered in his budget address, which is that a progressive income tax will fund his new pension ramp, along with everything else the state needs. Are we supposed to just take his word for that?
Pritzker, of course, also hasn’t said how much additional revenue he will propose to raise through a graduated income tax, or the rates needed to raise it. That, too is essential information he as stonewalled.
Pritzker is forever claiming transparency, but he’s not delivering. The press shouldn’t let him get away with it.
-Mark Glennon is founder of Wirepoints.